All posts tagged Euro T-Bill Fund

The EU has taken another step forward in its effort to prove to investors that the budgetary laxness that contributed to its current crisis won’t be repeated.

But it’s unlikely that investors will be so persuaded until they see the new fiscal compact agreed Monday in action, bearing in mind the disappointing implementation of previous budgetary rules.

So even if governments that now have difficulty borrowing are doing their utmost to cut their deficits and stick to the rules, it may be some time before they see the benefit in terms of lower borrowing costs.

Which is the problem that a group of European economists seek to address with a new proposal announced Tuesday. Acting under the umbrella of European League of Economic Cooperation — a pro-European business group that dates back to 1946 — they want euro-zone governments to pool their short-term borrowing for a period of four years after the compact comes into force early next year.

Their “Euro T-Bill Fund” would issue debt with a maximum maturity of two years under a joint and several guarantee, meaning that all governments would be equally responsible for repaying the debt.